Buoyant 2024 Predictions Review

The year 2024 seems worlds away given the tumultuous start to 2025. Our hearts are breaking for everyone affected by the devastating Los Angeles fires. Buoyant is preparing to publish our 2025 outlook, but before we do, we wanted to reflect on how well we did with our 2024 predictions. As venture capitalists, it’s our job to spot and predict trends so we can identify successful investment opportunities. Here’s our self-assessment of how accurate our crystal ball was last year.

‍Most prescient prediction

Data Centers: Rising Demand and Elusive Decarbonization

Prediction: The demand for computing power and storage space in data centers will continue to increase rapidly and decarbonization solutions for this sector will remain elusive.

Outcome: Datacenter energy demand surged by 15% globally in 2024 (International Energy Agency), fueled by AI-driven workloads and electrification. However, the challenge of decarbonization remained significant, despite innovations in liquid cooling and chip efficiency.

Grade: A+

Buoyant conducted primary research on this topic in late 2023 and identified this trend early. This has become one of the most impactful trends driving energy growth nationally - data centers could consume 9%of U.S. electricity generation by 2030, up from just 4% in 2023. Buoyant will continue to look for investments to help decarbonize data. In January 2024, we invested in Ocient, an energy efficient database solution, and we assessed about a dozen other compelling opportunities in this space. We are aiming to make additional investments in this category in 2025.

Climate Predictions

2023 was the hottest year on record. With El Niño expected to last through April 2024, the warming impacts will be experienced throughout 2024, resulting in more catastrophes such as heatwaves, floods and droughts. The insurance industry will be hit hard, and customers and states will call for reform.

Outcome: 2024 was hotter than 2023, with global surface temperatures surpassing 1.5°C above pre-industrial levels for the first time. Ongoing El Nino effects brought more severe weather events, including record-breaking heatwaves in Europe and Asia, catastrophic flooding in South America and Europe, worsening droughts in Africa, and record breaking losses attributed to wildfires in Canada and hurricanes in the Southeast US. MunichRe estimates 2024 losses from natural disasters to be $320B worldwide, which is higher than the inflation-adjusted averages of the past few decades. These events significantly impacted the insurance industry, as predicted, with increased premiums and public outcry for reform.

Grade: A

Melting permafrost and shrinking glaciers are posing risks not well understood by scientists. Frozen pathogens will thaw and affect environmental health and prosperity near arctic communities and beyond. Expect a number of scientific alarm bells to be rung about this in 2024.

Outcome: Research published in 2021 in Nature and NASA research on the topic from 2022 highlight alarming incidents, such as the discovery of ancient bacteria in thawing Siberian permafrost, sparking global health concerns. But there were no known incidences of disease resulting from these pathogens that we read about yet, nor any new significant research published.

Grade: C

Emissions will still increase, sadly and the 1.5°C limit will become harder to achieve.

Outcome: The Global Carbon Project reported a 2% rise in emissions compared to 2023, driven by economic recovery efforts. As stated above, in 2024 we surpassed 1.5°C above pre-industrial levels for the first time.

Grade: A

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ClimateTech Investing and AI Predictions

Climate investing will surpass 2023 levels, with a focus on carbon capture and hydrogen as oil majors spend big on these categories. While 2023 saw an increased number of bridge rounds and down rounds, 2024 will continue this trend as companies that raised in 2021-2022 run out of cash and need valuation adjustments. Although the IPO market will be more active in2024, this will take some time to trickle down and impact early-stage valuations.

Outcome: ClimateTech VC reported a 13% year-over-year decline in climate investments in 2024 at $30B total. But the World Bank recorded a 10% increase in 2024 from 2023 to $42.6B for overall finance of energy-related projects. Carbon capture and hydrogen technologies were awarded hefty sums from government, investors, and oil majors. The trend of bridge rounds and down rounds continued into 2024. While the IPO market was more active in 2024 compared to 2023, it was still below historical averages. Early-stage valuations have remained consistent from 2023 with the exception of AI startups.

Grade: B

The 2024 market will continue to prioritize profits overgrowth. Series B companies will need to show a path to profitability during their fundraise. However, the best startups will have no problem raising oversubscribed rounds at a premium as many companies will be raising bridge rounds. The focus on profitability will also be true for public markets and the queue of companies waiting for IPOs.

Outcome: PitchBook highlighted a 40% increase in bridge rounds, demonstrating that companies were unable to achieve the performance metrics to raise their next round. In particular, Series B rounds faced heightened scrutiny, with profitability paths a prerequisite for funding. Public markets favored profitable companies – almost 40% of companies that had IPOs in 2024 were profitable versus 33% in 2023 and around 20% in previous years.

Grade: A

Domain and industry-specific AI offerings will increase as startups and LLM pioneers deliver easy to use models built on specific datasets (energy, weather, scientific invention, manufacturing, etc). This is being described as AI Co-pilots for services. This will create opportunities for Buoyant to invest in some of these impactful models that can accelerate the decarbonization of every industry. Expect to see applications tailored for training industrial talent, driving energy market transactions, facilitating regulatory compliance, and speeding up the scientific discovery of new sustainable materials and food ingredients.

Outcome: PwC's "State of Climate Tech 2024" report noted that AI-centered climate ventures raised $1B more in the first three quarters of 2024 than in all of 2023. Weather analytics, manufacturing, and regulatory compliance gained traction. Buoyant made investments in Sunairio and HData in 2024, for example.

Grade: A

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Climate Category Predictions

Volatility continues with increasing influence from climate change. Over the past few years we have seen increasing impacts from climate change on our world. Many of these impacts have collided with geopolitical or market events creating unexpected disruptions… We expect there to be more serious supply chain issues as well as market and commodity volatility due to an increasing number of climate change events that will collide with geopolitical tensions and elections.

Outcome: WorldBank reports cited climate volatility as a significant driver of food commodity price spikes in 2024. Extreme droughts affected coffee and cocoa exports, among other agricultural commodities. Geopolitical tensions compounded supply chain issues.

Grade: A

Batteries will continue to garner investment as advancements in storage chemistries enhance the appeal of electric vehicles and the flexibility and resiliency that they offer the grid continue to deliver on long awaited expectations.

Outcome: Battery technologies received record funding in 2024, with advancements in solid-state batteries boosting EV efficiency and grid storage. BloombergNEF reported a 25% increase in battery sector investments, with significant breakthroughs in energy density and safety for EVs and grid applications.

Grade: A

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We remain concerned about the strength and credibility of the voluntary carbon markets that are trading a large number of low-quality offsets. In 2023, we saw the beginning of a market correction from buyer pullback; however, we expect a further correction to occur in 2024. We are more intrigued with insets that represent carbon reductions in corporate supply chains which contribute more directly to net zero plans. We expect the carbon insetting market to grow in 2024.

Outcome: Low-quality offsets continued to lose credibility, with voluntary carbon market activity declining by 20% (Ecosystem Marketplace). Meanwhile, insetting strategies saw continued adoption among multinational corporations like Nestle, and we saw the emergence of carbon intensity programs (from the likes of ADM) to incentivize and support farmers to use less carbon intensive farming practices.

Grade: A

The climate conversation will become more nuanced within the climatetech world and a deeper level of solutions develop, specifically we are expecting to see:

• ‍AgTech start to take biodiversity seriously
• Real estate and the built environment sector tackle the topic of embodied carbon and how to account for emissions outside of building operations
• The energy sector will need to take on hourly matching to help meet new green hydrogen incentive requirements and avoid greenwashing accusations.
• And generally we'll see more solutions built off of climate intelligence, such as insetting, as companies look to have impact that they can control, and increasingly detailed climate models that support better insurance pricing & reform
  
  

Outcome: The climate conversation was dominated by AI-driven load growth and the elections, which left little room for nuances associated with other areas of climate. There was progress on all areas above, but not nearly to the extent we would have expected.

‍Grade: C

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We start to see who is serious on climate change commitments. Death by pilot now means greenwashing, if you don't scale it isn't real. This combined with the conservative backlash on ESG and DEI will cause some corporations to backpedal on their commitments. Alternatively, some companies will double-down on decarbonization plans to demonstrate industry leadership and to follow-through on commitments made to employees and shareholders. We will be focused on working with those leaders.

Outcome: Both trends were evident. Some firms diluted ESG efforts amid political backlash, while leaders like Microsoft, Patagonia and IKEA expanded decarbonization initiatives.

Grade: A

The SEC will continue to delay guidance on climate disclosure. While new California disclosure laws will cover most major US companies and multiple EU regulations will come online.

Outcome: The SEC published its guidelines on climate risk disclosures for large corporations on March 6. But then a month later, they delayed the enforcement of the rules after industry backlash. We expect that these rules will not take effect during the Trump administration.

Grade: A

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Final Assessment

Overall Grade: A-

While many of our 2024 predictions were fairly accurate, we wish we weren’t correct for those related to the worsening of climate change and reduction of climate action. We cited data where possible, otherwise relied on anecdotal evidence. Send us a note if you disagree with our assessment – we love a debate!

Stay tuned for our 2025 predictions.